State aid: Commission approves €30 million German support for ArcelorMittal Eisenhuettenstadt's "Top Gas Recycling" project

The European Commission has authorised under EU State aid rules an investment aid of €30.18 million granted by Germany towards ArcelorMittal Eisenhuettenstadt GmBH's "Top Gas Recycling" (TGR) project. TGR is an innovative process that enables the separation of CO2 from other emission gases as they come out of the furnace and recycles the CO2-free emissions for the production of steel. The use of TGR will reduce CO2 emissions by 16% as compared to existing state-of-the-art technology, as steel makers use less coke. This is the first ever application of TGR technology on an industrial scale. The Commission concluded that the environmental benefits triggered by the aid would largely outweigh potential distortions of competition.

Vice President for Competition Joaquin Almunia said: " The Top Gas Recycling technology will enable considerable reductions of CO2emissions in the steel sector. The German measure is a contribution to the key objective of fighting climate change without unduly distorting competition."

The TGR process is a basic step in the EU-funded Ultra Low CO2 steel (ULCOS) production process, which also includes the carbon capture and storage of TGR-process-separated CO2. TGR was chosen out of 80 processes as one of the four most promising technologies to reduce CO2 emissions in steel production. The project notified by Germany concerns only the separation of CO2 without transport and storage.

The Commission assessed the measure under its Guidelines on state aid for environmental protection (see IP/08/80), that allow state support for environmental objectives, if, on balance, the environmental benefits of such support outweigh the potential distortions of competition brought about by the aid.

The Commission's investigation found that the aid is necessary as without the aid Arcelor Mittal Eisenhueteenstadt would not translate the technology into an industrial-scale application. The assessment took into account that even if the CO2 price, currently around €14/t, would double, it would still be too low to trigger an investment in TGR technology.

It is envisaged that companies participating in a ULCOS consortium, representing in total approximately 90% of steel production within the EU, will share among them the technological know-how from the TGR project for free. Therefore the know-how of the project can be seen as a public good benefiting the ULCOS partners collectively.

Given the risks involved in the project, its public good character, the alternative investment options of the company and the process that resulted in the selection of the TGR project as documented by Germany, the Commission considered that the aid was proportional.

The non-confidential version of the decision will be made available under the case number N 450/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.